Simplifying CGT by design: the OTS pushes for neutrality

On 11 November the Office of Tax Simplification published its first of two reports into capital gains tax. In contrast to other OTS reports this report looks at the policy design and principles underpinning the tax rather than the more usual study into technical and administrative issues. The report addresses three broad areas: rates and boundaries; reliefs (including the annual exempt amount and business reliefs); and capital transfers. Much of the reaction to the report has been on the proposal to align income tax and CGT rates but the report considers a number of other issues as well. Many of the points raised in the report have merits but it is important not to see these as government policies as yet. Instead the report provides a window on the CGT system and the distortions/policy interventions that exist. The chancellor will undoubtedly look critically at...